The ability for the grains sector to ship more volume will indeed improve margins for some types and quality
of grain. But it will not help in servicing emerging and niche markets, where transportation will play a key role in meeting customer needs.
"If you have spring wheat going to different mills with different
quality specifications, who can blend appropriately when you're dealing with 110-car unit trains?" says Don Wille, a grain merchandiser with Farmland-Atwood, Minneapolis. Wille participated in a conference held
recently in Fargo on how to establish container and identity-preserved grain marketing channels, organized by the Upper Great Plains Transportation Institute.
Wille says producers and processors should look at three
questions to help address the needs of a niche market:
• What special quality specifications are required?
• What type of cleaning is required?
• Are there special variety needs to service this market?
And, it's important to realize that fulfilling the customer's transportation and logistical requirements may be as important to creating a niche market
as the product itself.
"Adapt transportation to the needs of the end user. Can he take one rail car of wheat? What about snowstorms or bottlenecks that can hold up shipments? Communicate with customers and work
around these things. Maybe ship early and get the car out so it's there when the customer needs it, or augment by truck," says Wille.
Pricing is also a key issue. Sellers need to make sure they cover
special cleaning, handling, and storage costs. "But don't price yourself out of the market," he says. "Good trade is where both the seller and buyer are happy. It's a balancing act."
Niche markets
won't just fall in your lap—you have to seek them out. Talking with elevator managers and others who are market savvy can yield tips on potential niche markets.
But don't fall head over heels either for a market
that might be shaky. "Is the customer financially sound? Are the customer's customers sound? Is the product or idea short-term or long-term? A niche market can be a lucrative business, but if you're not going to
get paid on it, so what?"
Wille says foreign buyers and markets offer greater glamour and possibly greater profits, but also are riskier. "You're going beyond borders and it's much tougher to rectify not being
paid." Whether a crop is genetically enhanced, transportation logistics, export paperwork, even political stability are factors to be recognized and managed.
Niche markets don't necessarily have to be exotic or
specialty crops. It can be crops typically grown in this area but is for a special purpose, handled differently, or in short supply. For example, Wille says Marshall wheat has a consistency in malting that
maltsters prefer for making wheat beer. However, although the spring wheat variety was widely grown in the Red River Valley about 10 years ago, little of it is grown now. Thus, Wille says Marshall wheat can
command a premium of up to 75 cents a bushel.
Down the road, hemp is one niche market that may yet develop. Many policy makers have been hesitant to lend public support to measures allowing hemp production. Hemp is a
cousin to the marijuana plant, but has a different chemical composition to it that does not give a "high." Hemp has promising applications in the paper industry and other uses.
Production and market
potential of hemp continues to spur debate on whether it should be allowed. Wille predicts that one or more states in the Northern Plains will eventually allow limited production of hemp under guarded conditions,
thus "breaking the ice" and opening the door for the creation of a niche market.
Crambe, field peas, and pinto beans are all crops with good niche market potential, but are sensitive to oversupply.
Confectionery sunflower can command a good premium, but also requires careful production management. Wille sees the market for mid-oleic sunflower and canola continue to grow, and a market for mid-oleic soybeans and
corn developing within the next few years.
